TradFi Gets The Memo

The News From Planet Ruby—Friday, January 12, 2024

• Signal: ETF approval by SEC

• Noise: ETF approval by SEC

Bitcoin Fixes That?

It's a big one this week, as the SEC approves Bitcoin Spot ETFs—not once but twice. And a good thing too, since it's about time the world gained access to some honest money. US inflation ticked up on Thursday, with CPI rising ahead of expectations to 3.4%.

National debt continues to soar, with the US and UK both planning record new issuance in 2024. The US alone will issue $4 trillion in bonds this year. The budget deficit is expected to remain between 6.5% and 8% for the coming years.

Meanwhile, mortgage rate wars are heating up in the UK, with Barclays and Santander saying they will reduce rates on certain products by over 0.8%. Average rates for new, two-year fixed mortgages stands around 5.75%, down 1% from last year's peak.

Zoom out and the picture isn't so happy. The World Bank's analysts report that the global economy is on course for its slowest half-decade of GDP growth in 30 years. One silver lining is that the world is less likely to experience a global recession, but that's down to the relative strength of the US.

SEC Incompetence Causes Crypto Gyration

Bitcoin cracked $47k on Monday, putting in a 21-month high as anticipation of ETF approval reached fever pitch.

However, the big news of the week was almost upstaged on Tuesday when the SEC's X/Twitter account was compromised and an "unauthorized" message was posted, stating that Bitcoin ETFs had been approved. BTC immediately spiked as high as $48,000 and then dropped to $45,000, before stabilizing.

The actual ETF approval message on Wednesday saw a marginally more muted effect. Thursday brought a spike to $49,000, a new local high, before traders sold the news back to below $46,000, where bitcoin is currently trading.

Bitcoin Dominance hit a high of 54.5%, before dropping, enabling alts to enjoy a little resurgence. ETH pushed above $2,400 for the first time since May 2022. ETH is still in its long-term downtrend against BTC. 60% is still a potential target for Dominance.

So Good They Approved It Twice

There were various warnings in the early part of the week from uninformed critics, who tried to read the tea leaves around every update and interaction with the SEC.

Despite the false alarm, ETFs were duly approved on Wednesday evening, the final deadline. By this stage, the market was exhausted, and had already reacted the day before, wiping out a billion dollars in open interest (an embarrassing irony for the SEC, which is tasked with protecting investors).

In the run-up to approval, ETF issuers competed to provide the most attractive offering, slicing their fees to the bone and beyond.

Day one trading of the BTC ETFs broke volume records, with over $4 billion changing hands—though a significant percentage of this was investors selling GBTC.

Away from ETF news, Bitcoin's mempool (the holding pen for transactions yet to be confirmed by miners) is clogged worse than ever before—but it's not clear why.

So what's next for bitcoin? Sell the news, or a massive bull run due to those BlackRock billions? Jim Cramer warned that BTC was topping out, allowing the entire crypto space to breathe a sigh of relief.

What's New In The SKALEVERSE?

The SKALE portal 2.1 has been released. Check out the new updates at portal.skale.space.

That's all for this week!

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